Overview of current energy-efficiency policies in China

From 1970 to 2001, China was able to significantly limit energy demand growth through aggressive energy-efficiency programs. Energy use per unit of gross domestic product (GDP) declined by approximately 5% per year during this period. However, the period 2002–2005 saw energy use per unit of GDP increase an average of 3.8% per year. To stem this out-of-control growth in energy demand, in November 2005 the Chinese government enunciated a mandatory goal of 20% reduction of energy intensity between 2006 and 2010. The National People's Congress passed legislation identifying the National Reform and Development Commission as the lead agency to design and carry out programs in support of this goal. These policies and programs, created after almost a decade of decline of the energy-efficiency policy apparatus, have had considerable impact. Although initial efforts have not been sufficient to meet the annual declines required to reach the ambitious 20% energy intensity target, the latest reports indicate that China may now be on track to meet this goal. The paper provides an assessment of these policies and programs to begin to understand issues that will play a critical role in China's energy and economic future. Activities undertaken in China will have a significant influence on the global effort to reduce the growth, and later the absolute quantity, of greenhouse gas emissions.     

Taking out 1 billion tons of CO2: The magic of China's 11th Five-Year Plan?

China's 11th Five-Year Plan (FYP) sets an ambitious target for energy-efficiency improvement: energy intensity of the country's gross domestic product (GDP) should be reduced by 20% from 2005 to 2010 [National Development and Reform Commission (NDRC), 2006. Overview of the 11th Five Year Plan for National Economic and Social Development. NDRC, Beijing]. This is the first time that a quantitative and binding target has been set for energy efficiency, and signals a major shift in China's strategic thinking about its long-term economic and energy development. The 20% energy-intensity target also translates into an annual reduction of over 1.5 billion tons of CO₂ by 2010, making the Chinese effort one of the most significant carbon mitigation efforts in the world today. While it is still too early to tell whether China will achieve this target, this paper attempts to understand the trend in energy intensity in China and to explore a variety of options toward meeting the 20% target using a detailed end-use energy model.     

Energy efficiency as a preferred resource: evidence from utility resource plans in the Western US and Canada

This article examines the future role of energy efficiency as a resource in the Western US and Canada, as envisioned in the most recent resource plans issued by 16 utilities, representing about 60% of the region’s load. Utility and third-party-administered energy-efficiency programs proposed by 15 utilities over a 10-year horizon would save almost 19,000 GWh annually, about 5.2% of forecast load. There are clear regional trends in the aggressiveness of proposed energy savings. California’s investor-owned utilities (IOUs) had the most aggressive savings targets, followed by IOUs in the Pacific Northwest, and the lowest savings were proposed by utilities in Inland West states and by two public utilities on the West Coast. The adoption of multiple, aggressive policies targeting energy efficiency and climate change appears to produce sizeable energy-efficiency commitments. Certain specific policies, such as mandated energy savings goals for California’s IOUs and energy-efficiency provisions in Nevada’s Renewable Portfolio Standard, had a direct impact on the level of energy savings included in the resource plans. Other policies, such as revenue decoupling and shareholder incentives and voluntary or legislatively mandated greenhouse gas emission reduction policies, may have also impacted utilities’ energy-efficiency commitments, though the effects of these policies are not easily measured. Despite progress among the utilities in our sample, more aggressive energy-efficiency strategies that include high-efficiency standards for additional appliances and equipment, tighter building codes for new construction and renovation, as well as more comprehensive ratepayer-funded energy-efficiency programs are likely to be necessary to achieve a region-wide goal of meeting 20% of electricity demand with efficiency in 2020.

What induced China's energy intensity to fluctuate: 1997–2006?

China is the second largest energy consumer in the world. During 1997–2002, China's energy intensity declined by 33%. However, it rose by 10.7% over 2003–2005, and declined by 1.2% in 2006. What induced China's energy intensity to fluctuate so drastically? Industry accounts for approximately 70% of the total energy consumption in China. In this paper, we decompose China's industrial energy intensity changes between 1997 and 2002 into sectoral structural effects and efficiency effects (measured by sectoral energy intensities at two-digit level and including the shifts of product mix in the sub-sector or firm level), using Törnqvist and Sato–Vartia Index methods. The results show that in this period, efficiency effects possibly contributed to a majority of the decline, while the contribution from structural effects was less. During 2003–2005, the excessive expansion of high-energy consuming sub-sectors and the high investment ratio were foremost sources of the increasing energy intensity. Attributed to the government efforts, the energy intensity has started to decline slightly since July 2006. In future, to save more energy, in addition to technical progress, China should attach more importance to optimizing its sectoral structure, and lowering its investment ratio.     

China's ongoing energy efficiency drive: Origins,progress and prospects

In 2004 China's government launched a vigorous programme to reverse the trend of rising national energy intensity and to reduce intensity by 20% over the period 2006–2010. The aim of this paper is to examine this programme in the context of nearly 30 years of measures to enhance energy efficiency in China, and thus to evaluate the likelihood that today's policies will yield improvements over a longer period. The country achieved a sustained decline of energy intensity in the period 1980–2001 but this trend was reversed in 2002. This reversal arose from a shift in the structure of the economy to more energy-intensive industries and from a decline in the rate of technical innovation. The measures taken since 2003 have been directed principally at energy-intensive industries, but have also addressed other sectors of the economy. Though the energy intensity target for the year 2010 may be achieved, greater efforts will be needed to address a number of constraints which include: the reluctance to use economic and financial instruments; the dependency of energy policy on industrial and social policies; the nature of political decision-making and of public administration; a shortage of skills; and social attitudes to energy.     

The energy intensity target in China's 11th Five-Year Plan period—Local implementation and achievements in Shanxi Province

Facing the mounting pressure on energy security and increasing environmental concerns about air pollution and climate change, the Chinese government set a mandatory goal of 20% reduction of energy intensity in its 11th Five-Year Plan period (FYP, 2006–2010). In this paper we use Shanxi province to illustrate how policies and measures are implemented in practice at a provincial level as a response to the National FYP issued by the central government. Local policies are described and their effects are analyzed. We compare reported energy saving achievements with our own estimates and conclude that the achievements in Shanxi probably have been substantial since the start of the 11th FYP period. The most important measures taken by provincial and local governments seem to be in the secondary sector, such as Top-200/Top-1000 program and phasing out outdated technologies. However, Shanxi has still a long way to go to achieve satisfactory energy use. Further improvement of energy intensity will require continuing efforts. Although many measures are necessary, improving the energy efficiency in heavy industries and reducing the dependence on these industries should be particularly effective.     

China's oil reserve forecast and analysis based on peak oil models

In order to forecast future oil production it is necessary to know the size of the reserves and use models. In this article, we use the typical Peak Oil models, the Hu–Chen–Zhang model usually called HCZ model and the Hubbert model, which have been used commonly for forecasting in China and the world, to forecast China's oil Ultimate Recovery (URR). The former appears to give more realistic results based on an URR for China of 15.64 billion tons. The study leads to some suggestions for new policies to meet the unfolding energy situation.     

Energy structure,marginal efficiency and substitution rate: An empirical study of China

Energy efficiency is an important factor in developing energy policies as it represents the extent to which resources support economic output. In recent literature, relevant studies have mainly focused on aggregate energy efficiency, but rarely touched on the marginal efficiency of diverse energy resources and their comparative substitution rate. During 1978–2003, China's energy efficiency continually increased; and consequently became a hot topic in contemporary literature. However, there is no empirical study on the relationship between energy structure and energy efficiency. In order to close the gap, this paper reports the empirical study of the impact of China's energy structure on its energy efficiency from 1978 to 2003. The work covered primary estimation of the marginal efficiency of coal and petroleum in China, as well as the comparative substitution rate. Results indicate that the substitution rate between petroleum and coal is a factor of 5.38.     

Growth and structural change in China's energy economy

China has been the world's most vibrant economy and its largest source of energy demand growth over the past two decades, accounting for more than one-quarter of net growth in global primary energy consumption from 1980 to 2005. To sustain economic growth and rising living standards, China needs effective policies that anticipate and shape the country's future energy requirements. In this paper, we examine China's national economic and energy accounts over the past decade for insights into changing energy use patterns and their relationship to economic structure. Our results indicate that incipient structural changes in the Chinese energy economy and sustained economic and energy demand growth in China will pose important, and different, challenges for policymakers.     

Energy conservation and circular economy in China's process industries

Since energy consumption in process industries accounts for a great proportion of China's total energy consumption, energy conservation becomes the practical choice to reduce the conflict between energy demand and energy supply in China, and therefore, promoting energy conservation is the long-term solution to China's energy and environment problems from the source. In this paper, based on the introduction of the concept of energy consumption status in China's key energy-consuming process industries, the main technical bottlenecks and resource-environment problems were analyzed with special emphasis on energy utilization efficiency, energy consumption mode, and waste emission. As for the measures to resolve these problems, at the policy level, policies and programs of Chinese government related to energy conservation were introduced in combination with China's circular economy structure. At the technical level, the key technologies and research progress to improve energy utilization efficiency, reducing energy consumption, as well as utilizing the resource of discharged wastes were reviewed. Finally, three typical cases of the development of circular economy at three levels, namely the chemical industry, metallurgical industry, and electric power industry, were studied for the enforcement of circular economy and energy conservation in China's process industries.     

Evaluation of China's local enforcement of energy efficiency standards and labeling programs for appliances and equipment

AimsThis paper aims to evaluate local enforcement of China's mandatory appliance and equipment energy efficiency standards and labeling programs, two increasingly important policies for meeting national energy and carbon reduction targets. The expected energy savings of efficiency standards and labels can be fully realized only with strong enforcement to ensure compliance for all products sold. This paper provides comprehensive retrospective evaluation of the methodologies, results, progress and remaining challenges in pilot enforcement projects initiated in the absence of consistent national check-testing focused on energy efficiency.ScopeThis paper's scope is focused on 2006–2009 pilot local check-tests conducted to verify appliance and equipment compliance with China's mandatory energy label and efficiency standards.ConclusionsThis paper finds both improvement and some backsliding in compliance rates over time. Compared to earlier efforts, 2009 check-tests covered a wider regional and product scope but demonstrated greater variation in compliance rates. Labeling display and energy efficiency compliance was generally high across regions and most products, but lower compliance rates were observed in less economically developed regions and for lighting and industrial products. Based on these findings, areas for improvement in local awareness, product sampling methodology, check-testing tools and procedures are identified.     

China's 2020 carbon intensity target: Consistency,implementations, and policy implications

China has pledged to reduce its CO₂ emissions per unit of GDP by 40–45% by 2020 as of 2005 level. This research examines China's 2020 carbon intensity target and its interdependence with the overarching national economic and social development goals. The results show that, with annual GDP growth rate at 7% during the 12th Five-Year-Plan (FYP) period and 6% during the 13th FYP period, the 45% CO₂ intensity reduction target implies annual CO₂ emissions of 8600 million tonnes by 2020, close to 8400 million tonnes, the UNFCCC 450 ppm scenario for China. However, achieving only the 40% reduction target will lead to 9380 million tonnes CO₂ emissions in 2020 which largely surpass the UNFCCC 450 ppm scenario. We conclude that China's 45% CO₂ intensity reduction target is not only within international expectations but also self-consistent with its overall economic and social development strategy. Then primary energy and power planning for implementing the 45% carbon intensity reduction target is proposed. Related investment requirements are also estimated. To achieve the target, China needs to restructure the economic structure for significant improvements in energy conservation.     

Shaping China's energy security: The impact of domestic reforms

This paper is a subsequent study of China's energy security situation which concludes that China's energy security has not improved over 30 years of economic reform. The objective of the study is to explore qualitatively why the energy security situation has not improved. To answer the ‘why’ question, the study opens up a new perspective by analyzing the relationship between energy security and energy policies from the macroeconomic reform perspective. This study discusses major reforms that took place over 30 years. It is found that China's macroeconomic reform has restricted the formation of China's energy policies and determined its energy security situation. In essence, China's energy policies are only a reaction to the macroeconomic measures. In other words, China's energy policies are not originally intended to improve energy security, but passive reactions to China's macroeconomic reform. This explains why China did not improve its energy security situation despite 30 years of reform.     

The embodied energy and environmental emissions of construction projects in China: An economic input–output LCA model

A complete understanding of the resource consumption, embodied energy, and environmental emissions of civil projects in China is difficult due to the lack of comprehensive national statistics. To quantitatively assess the energy and environmental impacts of civil construction at a macro-level, this study developed a 24 sector environmental input–output life-cycle assessment model (I–O LCA) based on 2002 Chinese national economic and environmental data. The model generates an economy-wide inventory of energy use and environmental emissions. Estimates based on the level of economic activity related to planned future civil works in 2015 are made. Results indicate that the embodied energy of construction projects accounts for nearly one-sixth of the total economy's energy consumption in 2007, and may account for approximately one-fifth of the total energy use by 2015. This energy consumption is dominated by coal and oil consumptions. Energy-related emissions are the main polluters of the country's atmosphere and environment. If the industry's energy use and manufacturing techniques remain the same as in 2002, challenges to the goals for total energy consumption in China will appear in the next decade. Thus, effective implementation of efficient energy technologies and regulations are indispensable for achieving China's energy and environmental quality goals.     

China's energy consumption: A perspective from Divisia aggregation approach

China's total energy consumption, according to the official data, decreased impressively during 1997–1998 and increased sharply during 2003–2007, which in turn resulted in energy intensity fluctuation. Many literatures explained this “unusual phenomenon” from the perspectives of technical change, economic structure shifting and statistical data quality. They measured aggregate energy in thermal units by using linear summation approaches. In this paper, from the perspectives of heterogeneity and imperfect substitutability among diverse energy types, we further examine China's aggregate energy consumption by using Divisia (Sato-Vartia) approach. The results show that China's aggregate energy consumption and intensity fluctuated slightly less than values calculated by using conventional linear approaches, and the “unusual phenomenon” is partly explained. It also implies that China's energy intensity changes in 2006–2007 are slightly more optimistic than those officially reported, and the official communiqué of provincial energy intensity reduction achievements are partly bias. Some provincial achievement are underestimated or overestimated on some provinces. Our empirical results are also helpful to further research, such as energy–economic modeling, energy price elasticity, and elasticity of substitution among capital–labor–energy–material (KLEM). The difficulties or defects when using Divisia approach are also discussed in this paper.     

Study on China's low carbon development in an Economy–Energy–Electricity–Environment framework

Emissions mitigation is a major challenge for China's sustainable development. We summarize China's successful experiences on energy efficiency in past 30 years as the contributions of Energy Usage Management and Integrated Resource Strategic Planning, which are essential for low-carbon economy. In an Economy–Energy–Electricity–Environment (E4) framework, the paper studies the low-carbon development of China and gives an outlook of China's economy growth, energy–electricity demand, renewable power generation and energy conservation and emissions mitigation until 2030. A business-as-usual scenario is projected as baseline for comparison while low carbon energy and electricity development path is studied. It is defined as low carbon energy/electricity when an economy body manages to realize its potential economic growth fueled by less energy/electricity consumption, which can be characterized by indexes of energy/electricity intensity and emissions per-unit of energy consumption (electricity generation). Results show that, with EUM, China, could save energy by 4.38 billion ton oil equivalences (toes) and reduce CO₂ emission by 16.55 billion tons; with IRSP, China, could save energy by 1.5 Btoes and reduce CO₂ emission by 5.7 Btons, during 2010–2030. To realize the massive potential, China has to reshape its economic structure and rely much on technology innovation in the future.     

The impact of lifestyle on energy use and CO2 emission: An empirical analysis of China's residents

Based on the application of a Consumer Lifestyle Approach (CLA), this paper quantifies the direct and indirect impact of lifestyle of urban and rural residents on China's energy use and the related CO₂ emissions during the period 1999–2002. The results show that approximately 26 per cent of total energy consumption and 30 per cent of CO₂ emission every year are a consequence of residents’ lifestyles, and the economic activities to support these demands. For urban residents the indirect impact on energy consumption is 2.44 times greater than the direct impact. Residence; home energy use; food; and education, cultural and recreation services are the most energy-intensive and carbon-emission-intensive activities. For rural residents, the direct impact on energy consumption is 1.86 times that of the indirect, and home energy use; food; education, and cultural recreation services; and personal travel are the most energy-intensive and carbon-emission-intensive activities. This paper provides quantitative evidence for energy conservation and environmental protection focused policies. China's security for energy supply is singled out as a serious issue for government policy-makers, and we suggest that government should harmonize the relationships between stakeholders to determine rational strategies.     

Comprehensive evaluation of household indirect energy consumption and impacts of alternative energy policies in China by input–output analysis

Households consume a large amount of indirect energy through the consumption of goods and services. This fact makes the quantitative analysis of indirect household energy consumption the foundation of energy policy design. This paper improves the compilation method of energy input–output tables, and establishes a sequence of energy input–output tables for China. Based on these tables, the indirect energy consumption of both rural and urban households is calculated. Then, with economic data for the year of 2005, the adjusted input–output price model is applied to evaluate how the alternative energy policies impact production prices, consumption prices, and real income of rural and urban households through the mechanism of indirect energy consumption by using electricity as an example. This research has practical implications for Chinese economy. The integration of energy-efficiency improvements and energy prices increase serves as a means to achieve both economic and energy conservation goals, and may also have a positive effect on residents’ real income and a minimal effect on production prices.     

The effect of increasing exports on industrial energy intensity in China

Given China's heavy reliance on fuel energy and the dominance of its industrial sector in the economy, improving energy efficiency remains one of the practical means for the country to decrease energy intensity and to fulfill its commitment made at the Copenhagen Climate Change Conference to achieve a 40–45 percent reduction in CO₂ emission intensity by 2020. This study investigates the impact of exports on industrial energy intensity to explore the possibility of reducing energy intensity through greater exports. A panel varying-coefficient regression model with a dataset of China's 20 industrial sub-sectors over 1999–2007 suggests that in general, greater exports aggravate energy intensity of the industrial sector and that great divergences exist in the impact of exports on energy intensity across sub-sectors. A panel threshold model further estimates the thresholds for the major determinants of energy intensity: exports, input in technological innovations, and Foreign Direct Investment (FDI) intensity. Given the great differences in specific sub-sector characteristics and the changing roles played by different factors across sub-sectors, there is no general export policy that would work for all sub-sectors in reducing sub-sector energy intensity. Instead, policies and measures aiming to encourage more efficient use of energy should take into full consideration the characteristics and situations of individual sub-sectors.